Ofcom and Digital UK Switchover Tracker Survey. Switchover Progress Report Q1 2007

Ofcom and Digital UK Switchover Tracker Survey Switchover Progress Report Q1 2007 Publication Date: 8th May 2007

Contents Executive Summary 2 Chapter 1 The Q1 2007 Dashboards: 6 (1) By Regions (2) By Consumer Groups (3) By Switchover Segments Chapter 2 The Q1 2007 Tracker Results: 10 One year of Switchover Tracker Reporting Chapter 3 Analogue and Digital Recording Devices 15 Chapter 4 Update Q1 2007: Whitehaven tracker results 24 Chapter 5 IN FOCUS: Tenants and switchover 32 Results of the tenants survey Chapter 6 IN FOCUS: Westcountry 38 APPENDIX ONE: About the Switchover Tracker 42 APPENDIX TWO: Glossary of Terms 46 1

Executive Summary The Q1 2007 results of the Ofcom/Digital UK Switchover Tracker complete one full calendar year of digital switchover monitoring since interviewing started in April 2006. This report summarises emerging trends through the analysis of digital switchover consumer metrics as the UK is moving closer to switchover. Over the last year substantial improvements have been made building switchover awareness, logo awareness and a general level of understanding that people will have to take action and upgrade at least one of their television sets to digital. In Q1 2007 more than eight out of ten people (82%) were aware of the change to digital television, a growth of 16 percentage points (pp) from the 66% measured in April 2006, and awareness is almost universal in Border (96%), the first region to switch. However, with nearly 4.5 million households now within 3 years of switchover, there is a need to develop more detailed understanding of what switchover will entail. Large parts of the population do not know that they will have to upgrade all TV sets (24% are aware), or understand the impact of switchover on VCRs (32% awareness), and although most people understand the 2008-2012 timeframe for switchover only 15% know the correct date for their region. The leading four regions (Border, Westcountry, Wales and Granada) have seen more pronounced growth in the key metrics: awareness of switchover increased by 23pp from 64% in Q2 2006 to 87% in Q1 2007. Digital TV Conversion On 14 th of March 2007 Ofcom issued its Q4 Digital Television Progress Report on take-up of digital TV. In Q4 multichannel conversion was 78.6% and digital TV penetration, excluding those households who subscribe to analogue cable services, stood at 77.2%. The Ofcom/Digital UK Switchover Tracker figures similarly suggested that throughout the last year primary set conversion saw substantial growth up 7pp from 71% to 78% in the 12 months to Q1 2007 - in line with the multichannel TV take up figures published in Ofcom s quarterly Digital TV Progress report and other data sources. In this last quarter from January to March 2007 the Switchover Tracker figures for primary set conversion suggested no additional growth on primary sets or subsequent sets but the Tracker is one of the first sources to be released and we wait to see whether or not this is corroborated by other data sources as they are published. We note that satellite has shown strong growth in the quarter, with Sky reporting 32,000 net additions. 2

The Tracker suggests that 41% of additional (second, third, fourth etc.) TV sets (used for watching broadcast television) in UK homes have now been converted to digital. Overall 60% of the TV universe is currently able to receive a digital signal. Switchover Key Metrics In the 12 months from Q2 2006 to Q1 2007 nationwide switchover awareness has grown 16 percentage points from 66% to 82% including a 2 pp increase during this past quarter. We have previously noted significant gaps between consumer groups for key metrics including awareness and understanding, but are now encouraged to observe many of these gaps closing. In Q1 2007 both men and women showed identical levels of awareness (82%), whereas in Q2 2006 there had been an 11pp gap between them (women = 61%, men = 72%). Similarly, whereas in Q2 2006 there was an 31pp difference between the least aware age group, 16-24 year olds (47% aware) and the most aware age group, 65 to 74 year olds (78% aware); this gap has now slightly narrowed to just 25pp between 16-24 year olds 65% aware and 35 to 44 year olds who are 90% aware in Q1 2007. We are encouraged that awareness levels of switchover are especially growing amongst the older age groups. By Q1 2007 81% of those 75 years or older were aware of switchover, in line with the nation as a whole (82%) and 65 to 74 year olds showed above average levels of awareness (84%). Logo awareness has increased along the same lines as switchover awareness (+15pp from Q2 2006 to Q1 2007). During this last quarter six out of ten people (60%) recognised the digital tick logo. In Q1 2007 almost two thirds of the population (64%) knew that they had to get some form of digital receiver for at least one of their television sets in order to receive television after switchover (+3pp compared to the previous quarter). Despite reasonably high levels of general understanding, only one quarter (24%) say that they understand that they will have to upgrade all of their TV sets to digital. Awareness and understanding of the impact of digital switchover on analogue recording devices has not increased during the last year (+1pp from Q2 2006 to Q1 2007). During the last quarter about one third (32%) of the population understood that analogue recording devices will no longer be able to record one channel while you watch another (known as independent recording ) at switchover. This figure is not higher in the first region to switch (Border) at 31%. Knowledge of the regional switchover date has increased slowly but steadily throughout the last year, although more significant increases of date awareness could be observed in the early switchover regions. In Q1 2007 15% could cite the correct switchover date for their region compared to only 10% date awareness a year ago. Date awareness is highest in Border where 60% can cite the 2008/9 switchover dates. 3

Throughout the last year attitudes towards digital switchover improved marginally: in Q2 2006 66% felt switchover was either a positive or neutral thing, and this grew 4pp to 70% in Q1 2007. The proportion of the population who think switchover is unfair is therefore slowly decreasing. In Q1 of this year 24% of the population thought that switchover was unfair compared to 28% in Q2 of last year. Analogue and Digital Recording Devices With the growth of digital TV, the range of digital TV recorders (DTRs) with enhanced functionality is growing, and sales of analogue recorders have been declining. By the end of March 2007 we estimate that there were around 2.3 million DTRs in UK homes. But despite this at the end of last year still only 30% of all TV recorders sold at retail were digital, and only 26% of all DVD Recorders (DVD-Rs) sold were digital (the remainder had an analogue, rather than digital, tuner built in and will encounter the same problems as VCRs at switchover). The Q1 Tracker module explored use of analogue and digital TV recorders. The results show that analogue and digital recording devices are used in different ways. Whilst VCR and DVD-R users display very similar usage patterns, DTR users take advantage of other functionalities, such as setting the player to record whilst not at home or different channel recording. The most popular function amongst users of VCRs and DVDRs is playing back videos 56% whilst recording whilst DTR owners more commonly use independent recording and recording whilst not at home (both 62%), e.g. through series linking. Using analogue recorders to record one channel whilst watching another (known as independent recording ) is widespread. 4 out of 10 of owners of analogue recorders use this function and more than three quarters (74%) of those who use independent recording use it once a week or more frequently. Video Plus is a service by which a nine digit code (commonly provided in TV listings) is entered onto a VCR or DVD-R, instructing it to record a specific programme. This avoids the need to separately set the device to record a channel at a specific time. Many analogue recorders will not be able to use Video Plus after switchover. Our research found that a significant number (38%) of owners of analogue recording devices use Video Plus to help them record, and two out of ten use it on a weekly basis. When the loss of independent recording and Video Plus was explained to users, many said that they were quite or very concerned by this. 30% of all analogue recorder owners were concerned by the loss of independent recording, and 20% by the loss of Video Plus. In most cases consumers who wish to continue to use independent recording or record easily will be advised to buy a digital TV recorder. Our research suggests that more than half of the population (51%) have heard of DTRs and more than one in four are interested in specific digital recording functionalities such as, being able to pause live TV (43%), 4

recording TV programmes without tapes (41%) and being able to record at the touch of one button (41%). Switchover in Whitehaven On 15 th March 2007 Digital UK and Shaun Woodward MP announced that Whitehaven would be switching to digital television on 17 th October 2007. With five months to go before the first analogue channel is switched off we are encouraged that awareness of switchover is now almost universal, at 97%. The area appears to be generally comfortable with switchover, with attitudes improving slightly this quarter and 77% now say they believe switchover is either positive or neutral. However there has been no growth in understanding. Still 75% of residents know what they need to do for switchover, and only 39% are aware of what will happen to their analogue recorders many do not yet comprehend what will happen in practice. 70% of homes in the area are already digital on at least one of their TV sets, but conversion appears to have stalled at this level, with no growth in the Q1 2007 conversion figures. No one says they won t convert for switchover, but we do expect the majority (c.75% of homes with analogue sets) to wait until switchover to convert. Tenants and Digital Switchover Digital switchover awareness is currently highest amongst people owning their property outright (87%) and lowest amongst flat dwellers (67%) and those renting (73%). Conversion of primary sets and subsequent sets has increased considerably amongst all of the groups relevant to the Housing & Property Workstream. Quarter on quarter analysis shows major improvements especially amongst flat dwellers (67% had digital TV on their main set in Q1) and private renters (72% had digital TV on their main set in Q1) with increases between 10 and 17pp within the last year. Indicative results from a survey of tenants and flat-dwellers suggest that digital TV conversion amongst communal aerial users remains at a lower level (63%) than the population as a whole (78%). This in turn impacts on levels of digital television conversion amongst all flat dwellers (only around half of flat dwellers use a communal system), currently registering at 67% on the Tracker results. The survey also suggests that only a very small number of respondents (3%) have been contacted by their landlord or contacted their landlord themselves about work that needs to be done to the aerial system. This highlights the need for further active switchover communications on aerial upgrades to tenants, as currently planned by Digital UK. 5

Chapter 1 The number of surveys achieved for each region or consumer group is listed in the Base Size column The Dashboards Q1 2007 Quarterly results are presented on dashboards of progress: (1) The Dashboard: By Regions Key metrics for each switchover region, and the UK as a whole (2) The Dashboard: By Consumer Groups Key metrics provided for a range of demographic and consumer groups (see Appendix Two for a full Glossary of consumer group terms) (3) The Dashboard: By Switchover Segment Following a segmentation of the UK population for switchover, the dashboard reports the performance of the individual consumer segments across the key metrics. Detailed information on the switchover segments can be found in the Q3 2006 Switchover Progress Report. Note that conversion figures on the dashboard are based on tracker data, and are therefore indicative only. The figures provided in Ofcom s Quarterly Digital TV Progress Reports remain the authoritative guide to digital TV take-up. The Q4 2006 report shows that 77.2% of households have digital TV, and 78.6% have multi-channel TV (including analogue cable). How to read the dashboards FIGURE 1 NAVIGATING THE TRACKER DASHBOARDS BASE SIZE The key switchover metrics the responses to the most important questions from the Switchover Tracker survey that will be used to monitor progress by are listed across the top of the dashboard [see appendix for further explanation of the key metrics] -1- Awareness -6- -a- -b- Switchover Logo -2- Understanding -a- What to do for DSO -b- Update VCRs -c- Regional date -3- Pos/neut attitude -a- Overall opinion -b- Personal comfort -4- Intentions to convert -a- -b- -c- Convert at Will not Analogue least one convert any h/holds to set set cnvrt 12m -a- Primary set converted -5- Conversion -b- -c- -d- Other sets Full h/hold Total TV converted convrsion sets cnvrt NATIONAL 1964 80% 58% 61% 29% 11% 69% 82% 91% 2% 15% 79% 41% 45% 59% 78% 1 - Border 319 91% 69% 69% 32% 57% 71% 82% 90% 2% 17% 74% 42% 46% 58% 80% Satisfact'n with digital TV UK-wide national data is shown across the top line of both dashboards The lined below are either for the switchover regions, or the selected consumer groups 2 - Westcountry 301 91% 64% 76% 32% 14% 72% 81% 96% 2% 16% 75% 33% 35% 52% 79% 3 - Wales 305 85% 62% 67% 30% 28% 65% 79% 87% 1% 82% 42% 51% 62% 82% 4 - Granada 324 87% 64% 57% 33% 19% 65% 79% 92% 1% 17% 79% 47% 45% 62% 77% 5 - West 61* 78% 55% 66% 5% 66% 87% 89% 3% 86% 37% 44% 59% 83% 6 - STV/Gramp 81* 87% 64% 63% 37% 12% 75% 80% 94% 4% 85% 34% 43% 56% 82% 7 - Central 108 84% 60% 74% 32% 4% 68% 80% 91% 3% 69% 32% 35% 51% 84% 8 - Yorkshire 101 75% 62% 45% 28% 5% 59% 85% 94% 4% 77% 39% 41% 59% 70% 9 - Anglia 79* 89% 68% 70% 27% 2% 72% 81% 90% 5% 82% 39% 49% 61% 84% 10 - Meridian 95* 80% 53% 64% 34% 16% 72% 83% 93% 1% 84% 36% 44% 58% 75% 11 - London 106 74% 54% 60% 20% 12% 74% 82% 91% 0% 78% 55% 55% 64% 79% 12 - Tyne Tees 52* 65% 39% 44% 13% 69% 79% 55% 13 - Ulster 57* 44% 24% 30% 4% 46% 93% 70% 3% 69% 46% 60% Yellow cells contain data based on low sample sizes (under 100 surveys), and should therefore be treated with some caution Cells are greyed out where the sample sizes are very low (less than 50 surveys), and the data is therefore considered unreliable and not shown 6

(1) The Dashboard: By Regions * Very small base size data should be viewed as indicative only ** Extremely small base size data omitted BASE SIZE -1- Awareness -6- -a- Switchover -b- Logo -a- What to do for DSO -2- Understanding -b- Update VCRs -c- Regional date -3- Pos/neut attitude -a- Overall opinion -b- Personal comfort -4- Intentions to convert -a- Convert at least one set -b- Will not convert any set -c- Analogue h/holds to cnvrt 12m -a- Primary set converted -5- Conversion -b- Other sets converted -c- Full h/hold convrsion -d- Total TV sets cnvrt Satisfact'n with digital TV NATIONAL 1956 82% 60% 64% 32% 15% 70% 81% 88% 2% 12% 78% 41% 44% 60% 78% 1 - Border 325 96% 76% 75% 35% 60% 74% 83% 94% 1% 7% 71% 48% 45% 60% 80% 2 - Westcountry 311 92% 69% 78% 37% 22% 76% 81% 92% 1% 81% 47% 50% 63% 80% 3 - Wales 319 86% 63% 64% 25% 36% 63% 81% 94% 1% 86% 48% 51% 66% 80% 4 - Granada 311 87% 66% 64% 31% 23% 70% 79% 93% 2% 80% 41% 46% 60% 79% 5 - West 55* 86% 62% 74% 13% 78% 80% 89% 0% 67% 43% 37% 57% 6 - STV/Gramp 79* 82% 63% 56% 17% 69% 81% 88% 2% 80% 49% 52% 65% 83% 7 - Central 93* 86% 60% 63% 37% 8% 68% 79% 81% 3% 83% 35% 42% 60% 73% 8 - Yorkshire 106 83% 70% 58% 24% 6% 75% 86% 92% 1% 76% 38% 38% 57% 62% 9 - Anglia 80* 87% 56% 72% 26% 3% 61% 76% 92% 3% 67% 36% 36% 53% 71% 10 - Meridian 95* 88% 52% 77% 37% 20% 74% 80% 91% 1% 84% 39% 47% 60% 76% 11 - London 98* 72% 59% 60% 30% 13% 70% 81% 91% 2% 76% 42% 45% 60% 86% 12 - Tyne Tees 59* 84% 62% 60% 21% 65% 85% 89% 4% 93% 47% 52% 68% 81% 13 - Ulster 57* 51% 27% 33% 6% 58% 96% 61% 2% 60% 38% 56% Ulster: 6-month data (October 2006-March 2007) 7

(2) The Dashboard: By Consumer Groups * Very small base size data should be viewed as indicative only ** Extremely small base size data omitted BASE SIZE -1- Awareness -6- -a- Switchover -b- Logo -a- What to do for DSO -2- Understanding -b- Update VCRs -c- Regional date -3- Pos/neut attitude -a- Overall opinion THS - 75+ 204 81% 51% 54% 20% 19% 63% 73% 76% 6% 5% 56% 28% 35% 45% 63% THS - DLA/AA <75 98* 87% 76% 62% 51% 16% 67% 79% 97% 0% 78% 49% 47% 64% 71% 8 -b- Personal comfort -4- Intentions to convert -a- Convert at least one set -b- Will not convert any set -c- Analogue h/holds to cnvrt 12m -a- Primary set converted -5- Conversion NATIONAL 1956 82% 60% 64% 32% 15% 70% 81% 88% 2% 12% 78% 41% 44% 60% 78% Male 932 82% 65% 67% 41% 15% 77% 87% 90% 2% 15% 83% 45% 49% 64% 80% Female 1024 82% 56% 60% 24% 15% 63% 76% 86% 2% 11% 73% 37% 38% 55% 75% 16-24 207 65% 69% 47% 28% 8% 64% 85% 86% 2% 88% 41% 49% 63% 82% 65-74 230 84% 61% 56% 36% 16% 66% 76% 88% 2% 71% 33% 34% 53% 71% 65+ 434 83% 56% 55% 29% 18% 65% 75% 82% 4% 13% 63% 31% 34% 49% 68% ABC1 900 88% 59% 73% 35% 16% 75% 84% 91% 2% 7% 79% 43% 46% 61% 76% C2DE 1056 76% 61% 54% 29% 14% 65% 79% 86% 3% 17% 76% 39% 42% 59% 79% Rural 374 88% 63% 71% 40% 19% 70% 78% 89% 2% 10% 81% 39% 44% 59% 74% Urban 1582 81% 60% 62% 31% 14% 69% 82% 88% 2% 13% 77% 41% 44% 60% 78% Low income 450 79% 57% 55% 32% 15% 63% 74% 82% 3% 15% 62% 28% 37% 49% 75% BME 73* 58% 65% 40% 4% 64% 76% 77% 1% 73% 52% 59% 64% Non-English 71* 47% 71% 22% 3% 68% 81% 77% 2% 59% 42% 50% Disabled 319 83% 56% 53% 32% 14% 65% 73% 82% 6% 15% 63% 41% 36% 53% 70% Need assistance 122 78% 46% 42% 26% 13% 60% 61% 67% 5% 17% 28% 0% 1% 18% Hard to reach 858 80% 61% 60% 35% 14% 68% 77% 87% 2% 16% 74% 41% 43% 59% 78% Living alone 356 79% 53% 55% 30% 15% 65% 70% 82% 3% 13% 61% 27% 40% 50% 70% Families w/ chidren 580 82% 62% 67% 30% 12% 70% 85% 95% 1% 16% 87% 46% 46% 63% 79% Rent private 231 73% 64% 57% 26% 9% 74% 79% 92% 2% 72% 34% 46% 56% 82% Rent council 360 72% 58% 46% 28% 9% 59% 73% 80% 2% 11% 74% 37% 44% 57% 81% House 1793 84% 62% 65% 32% 15% 70% 81% 89% 2% 12% 79% 42% 44% 60% 77% Flat 155 67% 47% 51% 31% 14% 63% 79% 76% 1% 67% 27% 41% 53% 88% -b- Other sets converted -c- Full h/hold convrsion -d- Total TV sets cnvrt Satisfact'n with digital TV

(3) The Dashboard: By Switchover Segment * Very small base size data should be viewed as indicative only ** Extremely small base size data omitted BASE SIZE -1- Awareness -a- Switchover -b- Logo -2- Understanding -a- What to do for DSO -b- Update VCRs -c- Regional Date -3- Pos/neut attitude -a- Overall opinion -b- Personal comfort -4- Intentions to convert -a- Convert at least one set -b- Will not convert any set -c- Analogue h/holds to cnvrt 12m -a- Primary set converted -5- Conversion -b- Other sets converted -c- Full h/hold convrsion -d- Total TV sets cnvrt -6- Satisfact'n withdigital TV NATIONAL* 1956 82% 60% 64% 32% 15% 70% 81% 88% 2% 12% 78% 41% 44% 60% 78% Cultured Conservatives Out-and-About Families 273 86% 50% 69% 29% 26% 63% 74% 90% 2% 9% 66% 35% 37% 51% 59% 254 86% 63% 66% 30% 26% 64% 83% 91% 1% 86% 43% 46% 61% 81% Traditionalists 396 87% 60% 56% 29% 27% 57% 68% 89% 2% 13% 68% 35% 37% 52% 69% TV-Centrics 642 88% 72% 71% 33% 29% 75% 86% 93% 1% 19% 91% 48% 50% 66% 86% Rolling Stones 151 85% 68% 70% 31% 24% 81% 89% 89% 2% 74% 52% 52% 66% 82% High-Tech 240 Consumers 89% 73% 77% 42% 24% 84% 90% 95% 1% 93% 57% 56% 73% 81% *The Ofcom/DUK tracker segmentation uses a separate weighting profile to compare different types of consumers and their attitudes towards digital switchover. For reasons of consistency in the report the overall national figures remain the same as on the previous dashboards. 9

Chapter 2 The Q1 2007 Tracker Results Over the last year substantial improvements have been made building switchover awareness, logo awareness and a general level of understanding that people will have to take action and upgrade at least one of their television sets to digital. However, with nearly 4.5 million households now within 3 years of switchover, there is a need to develop more detailed understanding of what switchover will entail. Large parts of the population do not know that they will have to upgrade all TV sets, or understand the impact of switchover on analogue recorders, and although most people understand the 2008-2012 timeframe for switchover only 15% know the correct date for their region. Switchover Awareness After the first year of the Ofcom/Digital UK Switchover Tracker substantial improvements have been made building awareness of digital switchover. In Q 1 of this year switchover awareness stood at 82%; a further increase of 2pp compared to the previous quarter. The past year has seen 16pp growth in awareness, driven by Digital UK s campaign activity and those of our industry partners with the largest awareness gains during Q4 2006 following the autumn switchover campaign. Levels of awareness have improved amongst all age groups and consumer groups. The largest increases of levels of awareness were achieved amongst low income households (+20pp) and the 75+ age group (+18pp) who now show similar levels of switchover awareness to the population as a whole. In Q1 2007 switchover awareness stands at 79% amongst the low income group and at 81% for the 75+ population. As previously seen, lower levels of switchover awareness remain amongst the youngest age group of 16 to 24 year olds (65%), amongst minority ethnic groups (58% awareness, indicative only) as well as amongst people who speak English as their second language (47% awareness, indicative figures only). We have previously noted significant gaps between consumer groups for key metrics including awareness and understanding, but are now encouraged to observe many of these gaps closing. In Q1 2007 both men and women showed identical levels of awareness (82%), whereas in Q2 2006 there had been an 11pp gap between them (women = 61%, men = 72%). Similarly, whereas in Q2 2006 there was an 31pp difference between the least aware age group, 16-24 year olds (47% aware) and the most aware age group, 65 to 74 year olds (78% aware); this gap has now slightly narrowed to just 25pp between 16-24 year olds 65% aware and 35 to 44 year olds who are 90% aware in Q1 2007. We are encouraged that awareness levels of switchover are especially growing amongst the older age groups. By Q1 2007 81% of those 75 years or older were aware of switchover, in line with the nation as a whole (82%) and 65 to 74 year olds showed above average levels of awareness (84%). 10

FIGURE 2: DEVELOPMENT OF SWITCHOVER AWARENESS Q2/2006 VS. Q1/2007 BY AGE GROUP 100% 75% 50% 80% 82% 70% 66% 47% 65% 60% 76% 65% 90% 89% 86% 84% 75% 75% 78% 81% 63% 25% 0% Total 16-24 25-34 35-44 45-54 55-64 65-74 75+ Q2 06 Q3 06 Q4 06 Q1 07 Awareness that digital switchover is happening is generally higher in the lead switchover regions Border, Wales, Westcountry and Granada with awareness levels now above 86% in all of those regions. The Border TV region as the first region to switchover in 2008 and 2009 has reached almost universal levels of awareness with 96% of the population aware of the change. FIGURE 3: SWITCHOVER AWARENESS Q2/2006 VS. Q1/2007 120% 100% 80% 60% +16pp 66% 82% +14pp 82% 96% +15pp 71% 86% +15pp 77% 92% +23pp 64% 87% 40% 20% 0% National Border Wales Westcountry Granada Q2 2006 Q1 2007 Logo awareness has increased along the same lines as switchover awareness (+15pp from Q2 2006 to Q1 2007). During this last quarter six out of ten people (60%) recognised the digital tick logo. Understanding of Switchover General levels of understanding that people will need to take action and get digital TV for their television has also been growing throughout the last year (+12pp from Q3 2006 to Q1 2007). In Q1 2007 almost two thirds of the population (64%) knew that they had to get some form of digital receiver for at least one of their television sets in order to receive television 11

after switchover. The pattern of consumer groups showing lower levels of general understanding is similar to those showing lower levels of switchover awareness, e.g. the youngest age groups (47%) and minority ethnic groups. Despite reasonably high levels of general understanding, the proportion of people who understand the detail of what they may need to do for switchover is lower. Only about one quarter (24%) of respondents understand without prompting that they will have to upgrade all of their TV sets to digital. When asked directly (prompted) whether people understand that they have to upgrade every TV set, 64% say that they do know this. However this more developed level of understanding is not any higher in the lead switchover regions. On average 63% of people in Border, Wales, Westcountry and Granada say they know that they have to upgrade every TV set for switchover. FIGURE 4: Q1 RESULTS FOR UNDERSTANDING OF DIGITAL SWITCHOVER 100% 90% 80% 70% 60% 64% 64% - understand what they need to do for switchover 50% 40% 30% 20% 10% 0% Accurate Understanding DSO 24% Understand need to get digital TV on every set 40% understand need to get digital TV 7% - understand some element of switchover but not what they need to do 3% 4% Understand that TV is changing, but not what they need to do Understand benefits of digital TV 11% Aware but no understanding 18% Not aware of DSO Similarly awareness and understanding of the impact of digital switchover on analogue recording devices (Video Recorders and analogue DVD Recorders) has not grown during the last year (+1pp from Q2 2006 to Q1 2007). During the last quarter about one third (32%) of the population understood that analogue recording devices will lose the ability to independent recording and this figure is no higher in the early switchover regions (31% average for Border, Wales, Westcountry and Granada). Digital UK has developed a communications strategy for the coming year to address this. Further information on the development of the recorders market and how consumers use their recording devices in the home can be found in chapter 3 of this report Knowledge of the regional switchover date has increased slowly but steadily throughout the last year, although more significant increases of date awareness can be observed in the early switchover regions where quarterly switchover dates were communicated transmitter by transmitter 12

in October of last year. Overall 15% of the population could cite their correct switchover date in Q1 2007 compared to only 10% date awareness a year ago. In Border six out of ten understand that their region is switching over to digital in 2008 and 2009 followed by 36% date awareness in Wales, 23% in Granada and 22% in the Westcountry. Intentions to convert to digital The number of those intending to convert at least one TV set to digital for switchover has held stable during this past year and in every quarter 9 out of 10 people stated that they have a definite plan to convert at least one TV set. In Q1 88% of the population stated that they intend to convert at least one set for switchover. Equally the number of resisters who are saying that they will not convert any of their sets to prepare for switchover remained unchanged. For the last 3 quarters only 2% of respondents intended not to convert any of their TV sets to digital. The remaining 10% (between those saying they will definitely convert and those saying they won t) are respondents who say they don t yet know. In Whitehaven no one has said they will not convert for switchover. Plans to convert television sets to digital in time for digital switchover are not an indicator for people acting early. The national and the Whitehaven Tracker surveys currently suggest that people will wait until the last minute to take action. Throughout the last year the proportion of analogue households intending to convert within the next year varied between 10% (in Q2 2006) and 16% (in Q3 2006). In Q1 2007 still only 12% of analogue households said they intend to convert at least part of their equipment to digital in the next 12 months. See chapter 4 for estimates of when the residents of Whitehaven will convert to switchover Digital TV take-up figures The Ofcom/Digital UK Switchover Tracker figures suggested that throughout the last year primary set conversion saw substantial growth up 7pp from 71% to 78% in the 12 months to Q1 2007 - in line with the multichannel TV take up figures published in Ofcom s quarterly Digital TV Progress report and other data sources. In this last quarter from January to March 2007 the Switchover Tracker figures for primary set conversion suggested no additional growth on primary sets or subsequent sets but the Tracker is one of the first sources to be released and we wait to see whether or not this is corroborated by other data sources as they are published. We note that satellite has shown strong growth in the quarter, with Sky reporting 32,000 net additions. The Tracker suggests that 41% of additional (second, third, fourth etc.) TV sets (used for watching broadcast television) in UK homes have now been converted to digital. Overall 60% of the TV universe is currently able to receive a digital signal. 13

Attitudes to digital switchover Throughout the last year attitudes to switchover improved marginally (+4pp) from 66% (Q2/2006) to 70% (Q1/2007) of the population thinking positively or neutral about digital switchover. Most people in fact feel neutral about switchover, and in Q1 2007 46% of the population think that digital switchover is just one of the things that will happen and that they will have to get on with. Positive attitudes towards digital switchover are made up of 17% who think that switchover is good for the UK and 7% who think that switchover is good for them, e.g. getting access to additional channels or improved sound and picture quality. Analysis of the last year of switchover tracking results also shows that the proportion of the population who think negatively about switchover and state that people should not be forced to switch is slowly decreasing. It seems that attitudes become increasingly positive or neutral as switchover approaches. In Q 1 of this year 24% of the population thought that switchover was unfair compared to 28% in Q 2 of last year. A graph comparing attitudes towards switchover on a national level to Whitehaven and Border can be found in chapter 4. The second measure used to assess attitudes towards digital switchover looks at the personal level of comfort with the actual process of switching over. During the last year eight out of ten people (81% in Q1 2007) said that they were OK with the idea of switchover and did not feel threatened or worried by it, and this figure has held steady for every quarter of results. 14

Chapter 3 Analogue and Digital Recording Devices Ownership of analogue and digital recording devices in UK homes There are in total around 34.3m recording devices in UK homes, including both analogue Video Cassette Recorders (VCRs), DVD Recorders and digital TV recorders. Of these, we estimate around 2.3 million are Sky Plus, Virgin V+ or Freeview recorders. The majority of the remaining 32 million analogue recording devices are video recorders, 27m VCRs and around 5 million DVD Recorders (DVDR). 60% of analogue recorders may not need converting for switchover, because our research suggests that they are not used for independent recording, and are only used for playing back tapes or prerecorded videos for which purposes they will still be perfectly usable after switchover. That leaves around 40% of analogue recorders (11.1 million VCRs and 2.4 million analogue DVD Recorders) that may need replacing or converting for switchover if viewers wish to retain the ability to record independently of the channel their TV is tuned to. FIGURE 5: NUMBER OF RECORDERS IN UK TV HOMES (MILLION) Analogue DVD Recorders not used for independent recording, 2.6 m Analogue DVD Recorders - used for independent recording, 2.4 m Digital recorders, 2.3 m Analogue VCRs - used for independent recording, 11.1 m Analogue VCRs - not used for independent recording, 15.9 m Overall older respondents are more likely to own and use VCRs, with VCR ownership peaking amongst 55 to 64 year olds (71%), but even 75+ year olds own and use proportionately more VCRs than the population as a whole. Ownership of digital recording devices tend to be the more affluent younger demographic of the population, most commonly between 25 to 54 years old. This makes DTRs also a type of equipment present in some family homes. 15

FIGURE 6: ANALOGUE AND DIGITAL RECORDER OWNERSHIP BY AGE GROUP 80% 70% 60% 63% 66% 59% 62% 57% 67% 60% 60% 61% 71% 72% 70% 65% 70% 71% 67% 50% 40% 30% 20% 10% 0% 21% 22% 19% 16% 14% 14% 8% 10% 8% 8% 9% 10% 9% 5% 3% 3% TOTAL 16-24 25-34 35-44 45-54 55-64 65-74 75+ VCR Digital TV Recorder DVD Recorder Any Analogue Recorder Use of analogue and digital recording devices in UK homes This quarter s additional recorders ad hoc module suggests that analogue and digital recording devices are used in different ways. Whilst VCRs and DVD-R users display very similar usage patterns, DTR users take advantage of other functionalities, such as setting the player to record whilst not at home or different channel recording. The most popular function amongst users of VCRs and DVDRs is playing back videos 56% whilst recording whilst DTR owners more commonly use independent recording and recording whilst not at home (both 62%), e.g. through series linking. It is possible that increasing the ease of use, avoiding lengthy programming sessions and the ability to record directly onto a hard drive have impacted positively on this development for digital TV recorders. Setting the recorder in advance to record while not at home or available to watch TV is more popular amongst respondents owning and using digital recording (62%) devices than analogue ones (38%). But still more than two thirds (67%) of VCR owners use this functionality once a week or more often. 16

FIGURE 7: MOST COMMON USE OF ANALOGUE VS. DIGITAL RECORDING DEVICES 70% 60% 50% 40% 30% 20% 10% 0% 40% 62% I record a programme while I am at home and watching a different channel 30% 20% I record a programme that I am watching - for someone else to watch 26% 38% I record a programme that I am watching - to keep and watch again later 38% 62% I set the player to record a programme when I am not at home/not available to watch TV 13% 47% I set the player to record several programmes on THE SAME channel when I am not at home/not available to watch TV 16% 52% I record several programmes on DIFFERENT channels when I am not at home/not available to watch TV 42% 36% I record a programme while I am out that I plan to keep after I watch it 56% 36% I use it for watching prerecorded tapes or DVDs Independent recording functionalities Owners of anlogue recorders Owners of digital recorders Independent recording Recording one channel whilst watching another also known as independent recording is amongst the more popular function used by owners of analogue recorders with 4 out of 10 of respondents still using the function. As this functionality will be lost after switchover unless people upgrade their equipment and buy a digital recording device, concern remains that this could impact negatively on digital switchover. People who use the independent recording functionality on their VCRs use it very frequently and amongst DVDR users the frequency of independent recording is even higher than amongst VCR owners. FIGURE 8: FREQUENCY OF USING INDEPENDENT RECORDING 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 17% 35% 74% 4% 45% 22% 31% 14% 7% 6% 8% 1% 4% Any VCR Any DVDR 80% Don't Know Less frequently About once a month A couple of times a month About once a week A couple of times a week Every day 17

More than three quarters (74%) of those who use independent recording on analogue devices use it once a week or more frequently. Many popular programmes, especially some television series, will run around the same time of the day each week and users of independent recording can catch up with the plot by recording one programme whilst watching the other and catching up with the other series later. Currently, over half of all respondents (55%) who own recording devices are not particularly concerned about losing the independent recording functionally after digital switchover, due to a large proportion of respondents not using this function regularly. However, amongst users of independent recording the proportions of those feeling concerned are higher and almost half of all users (47%) are very concerned (24%) or quite concerned (23%) about the loss of the function when digital switchover happens. Generally concerns are higher amongst the older demographic. 42% of 55 to 64 year olds say they are concerned, with all older age groups being over average concerned. Higher than average levels of concern were also recorded amongst disabled respondents (34% vs. 30% nationally) and especially amongst those receiving Disability Living Allowance or Attendance Allowance (40% quite or very concerned vs. 30% nationally). FIGURE 9: CONCERNS ABOUT LOSING INDEPENDENT RECORDING 100% 90% 80% 70% 60% 50% 2% 2% 9% 23% 32% 55% 38% 29% 14% 40% 30% 20% 10% 0% 13% 16% 14% Total 30% 23% 47% 24% All those who use independent recording Very concerned Quite concerned I'm a little concerned but I don't really mind Not very concerned Not at all concerned - I never use this function Don't know Video Plus Video Plus is a service by which a nine digit code (commonly provided in TV listings) is entered onto a VCR or DVD-R, instructing it to record a specific programme. This avoids the need to separately set the device to record a channel at a specific time. Many analogue recorders will not be able to use Video Plus after switchover. Our research found that a 18

significant number (38%) of owners of analogue recording devices use Video Plus to help them record, and two out of ten use it on a weekly basis. When the loss of independent recording and Video Plus was explained to users, many said that they were quite or very concerned by this. 30% of all analogue recorder owners were concerned by the loss of independent recording, and 20% by the loss of Video Plus. FIGURE 10: CONCERNS ABOUT LOOSING VIDEO PLUS FUNCTIONS 100% 4% 3% 90% 80% 38% 42% 70% 68% 60% 50% 25% 40% 30% 8% 44% 20% 9% 10% 20% 12% 0% Total 11% 27% 14% 15% 29% All who use Video Plus Don't know Not at all concerned - I never use this function Not very concerned I'm a little concerned but I don't really mind Quite concerned Very concerned The market for digital recorders The ad hoc module also to explored the market for digital recording devices to understand the likelihood that consumers will upgrade to a digital TV recorder which converts their analogue recorders and television with one piece of equipment to digital, and gives them access to a range of new recording functionalities. The past three years have seen steady growth in take-up of digital TV recorders and falling sales of analogue Video Cassette Recorders (VCRs). By the first quarter of 2006, sales of digital TV recorders including Sky+ subscriptions, cable PVR subscriptions, and sales of DTT recorders and DVD-Recorders with a hard drive outstripped sales of VCRs. Over the last four quarters, digital TV recorder sales reached an average of more than 280,000 per quarter, compared to 161,000 VCR sales per quarter. 19

FIGURE 11: SALES OF ANALOGUE VCRS AND DIGITAL RECORDERS (FOUR-QUARTER ROLLING AVERAGE) (THOUSANDS) 800 640 480 320 160 0 592k 563k 522k 455k 414k 374k 325k 324k 254k 235k 256k 271k 284k 201k 169k 151k 126k 66k 80k 99k 117k 140k 159k 186k Mar 2004 Jun 2004 Sept 2004 Dec 2004 Mar 2005 Jun 2005 Sept 2005 Dec 2005 Mar 2006 Jun 2006 Sept 2006 Dec 2006 VCR Digital recorders Source: GfK (EPOS data), Sky (includes net Sky+ additions) Although digital recorders are proving increasingly popular in the market overall, this is largely driven by subscriptions to satellite and cable services. At the retail level, perhaps surprisingly, sales of digital recorders are still dwarfed by sales of analogue recorders. FIGURE 12: QUARTERLY SALES OF ANALOGUE AND DIGITAL TV RECORDERS NOTE: ANALOGUE RECORDERS INCLUDE VCRS AND ANALOGUE DVD-RS; DIGITAL RECORDERS INCLUDE DIGITAL DVD-RS AND DIGITAL TV RECORDERS (THOUSANDS) 1000 900 800 700 600 500 400 300 200 100 0 828 Analogue Recorders Digital Recorders 600 432 Source: GfK LekTrak Sales Data 494 26 24 25 32 This is due in large part to continued high levels of analogue DVD-R sales. At the end of 2006 still only 26% of DVD-Rs sold had a digital tuner inside, and would therefore be able to independently record after switchover. 885 571 449 63 44 47 Q404 Q105 Q205 Q305 Q405 Q106 Q206 Q306 Q406 % Digital 3% 4% 5% 6% 7% 7% 9% 22% 30% 376 108 567 247 20

FIGURE 13: QUARTERLY SALES OF ANALOGUE AND DIGITAL DVD-RECORDERS (THOUSANDS) 1000 900 800 700 600 500 400 300 200 100 0 313 Analogue DVD-Rs Digital DVD-Rs 244 194 309 640 394 320 3 9 5 3 18 22 23 Q404 Q105 Q205 Q305 Q405 Q106 Q206 Q306 Q406 % Digital 1% 4% 2% 1% 3% 5% 7% 19% 26% Source: GfK LekTrak Sales Data Digital UK is working with the supply chain to convert DVD-R product lines to digital. Growth in the digital recorder market has been driven by the steadily increasing take-up of Sky+ by satellite subscribers and by the launch of new products including Telewest s HD-compatible recorder, the TV Drive (now marketed by Virgin Media as V+), and by new DTT recorders with enhanced functionality including larger hard drives, full 7-day EPGs and dual or triple tuners. BT s planned IPTV product, BT Vision, will also include a digital recorder, with a 160GB hard drive and access to a library of on-demand content. At the time of writing, prices for DTT recorders start at 99 for a recorder with twin tuners, a 7-day EPG and an 80GB hard disk; standard Sky+ boxes cost 99 for a 20GB box, with 60 installation and free subscription for subscribers to two or more premium channels; and Virgin s V+ box is HD-compatible TV Drive is available to new customers for 75 and between 10 and 15 per month subscription depending on the package type. Freeview announced plans to launch a new digital TV recorder brand in 2006, Freeview Playback, to raise consumer awareness and boost sales of DTT recorders. The Freeview Playback brand is expected to be in the market in summer 2007. The recorders module suggests that in Q1 2007 more than half of the population (51%) have heard of digital TV recorders (DTRs) also called Personal Video Recorders (PVR), with awareness higher amongst male, younger and affluent respondents. However, understanding of what a digital TV recorder does is not so well understood. Almost two thirds (68%) of the population claim not to understand what a digital recording device 261 63 438 157 21

can do. Even amongst those aware what a DTR is, one third (33%) admit that they do not understand the functionalities of a digital TV recorder. Awareness of different types of digital TV recorders is lower than the general level of awareness, with Sky+ by far the highest brand known as a digital recording device (59%) without prompting the respondents and 17% of respondents mentioning Freeview Playback. However, a significant number of respondents associating Video Recorders (VCRs) and DVD Recorders as a digital recorder, although most of those sold are only equipped with an analogue tuner, suggest confusion amongst consumers about this issue. Prompted awareness of the digital recording brands currently on the UK market or getting onto the market is significantly higher with more that two thirds of the population aware of Sky+ (71%), followed by Freeview Playback (37%) and Top Up TV Anytime (22%). UK brands which were less recognized are Telewest TV Drive (17%) now marketed by Virgin Media as V+ and BT Vision (10%). Despite the lack in awareness and understanding of digital TV recorders, the general concept and especially unique new recording functionalities of digital TV recorders seem to be an appealing product in the eyes of most respondents, following a brief explanation of the product. More than one in four are interested in existing functionalities such as: Being able to record whilst watching another channel 46% Being able to pause live TV 43% Recording TV programmes without tapes 41% Being able to record at the touch of one button 41% FIGURE 14: DRIVERS FOR PURCHASING A DIGITAL TV RECORDER Being able to record one channel while watching another Being able to pause live TV Recording TV programmes without tapes Being able to record at the touch of a button Setting it to record an entire series Being able to record many more hours of TV than on VHS tape/ DVD Converting TV & VCR to digital with just one box/ remote Getting digital channels Energy saving of converting TV & VCR with just one box Being able to access HDTV Being ready for DSO Being able to access on-demand content Setting it to record from my mobile/ computer Personalised recording based on key word search Something else Don't see any benefit Don't know 1% 7% 9% 21% 20% 19% 18% 17% 16% 15% 27% 27% 33% 46% 43% 41% 41% 22

The aspect of converting TVs and VCRs in the home with just one piece of kit (27%), getting access to digital channels (21%) and in general being ready for switchover (18%) seemed less appealing as drivers for purchasing a DTR in the future. Despite generally raising the profile and knowledge of digital TV recorders amongst consumers in the UK market place, the main driver for growing the digital recorders market will be the price for purchasing a digital TV recorder. Falling prices will be the greatest encouragement for consumers to purchase a digital recorder in the future with DTRs sold at comparable prices to DVD recorders to look as an attractive alternative. Looking forward on recorders Although analogue and digital recording devices have been referenced in all long-form Digital UK communications to date, the switchover campaign was more focused on raising awareness and growing understanding throughout last year. Looking forward Digital UK will start addressing the impact of digital switchover on analogue recording devices as a key issue in its communications and we should see growing levels of awareness amongst the UK population in forthcoming quarters 23

Chapter 4 Update Q1 2007: Whitehaven tracker results Summary On 15 th March of this year Digital UK and Shaun Woodward MP announced that Whitehaven would be switching to digital television on 17 th October 2007. With five months to go before the first analogue channel is switched off we are encouraged that awareness of switchover is now almost universal, at 97%. The area appears to be generally comfortable with switchover, with attitudes improving slightly this quarter and 77% now say they believe switchover is either positive or neutral. However there has been no growth in understanding. 75% of residents know what they need to do for switchover, and only 39% are aware of what will happen to their analogue recorders many seem to not yet comprehend what will happen in practice. More than half (54%) know that switchover will happen between October and December 2007, and in qualitative research and our interactions with the local community we observe a general sense that it will happen later this year. Following the date announcement we will now track understanding of the month and day 70% of homes in the area are already digital, but conversion appears to have stalled at this level, with no growth in the Q1 2007 conversion figures. No one says they won t convert for switchover, but we do expect the majority (c.75% of homes with analogue sets) to wait until switchover to convert. Most will convert via Freeview: 70% of analogue homes have indicated they will get digital terrestrial, and a further 25% have not yet decided how they will convert. This creates pressure at the point of switchover, with a total of 18,500 DTT sales anticipated in the few weeks around switchover. Digital UK and the supply chain are working together to ensure that there is sufficient supply to meet this demand. 43% have heard of the Help Scheme (up from 33% at the end of 2006). Whilst most correctly estimate it will be provided to the elderly, one third incorrectly believe low income households will be eligible. At this stage most anticipate the help to be financial assistance and/or provision of a set-top box, rather than practical help. Two thirds of residents have no particular concerns about switchover, but cost still tops the list of things people do worry about (19%). A growing number see benefits for raising the profile of the town (35%). 24

Universal Awareness But Limited Understanding Awareness of switchover in Whitehaven is almost universal at 97%. This is also the awareness level attained immediately pre-switchover in Sweden, and appears to be a benchmark target for regional pre-switchover awareness. The 3% who haven t heard of switchover do not exhibit a very distinct profile, but are slightly more likely to be younger (5% of 16-34s are not aware), older (8% of the 75+ are not aware) or ABC1 (6% are not aware). Lower awareness amongst the youngest and oldest age groups fits with our experience at a national level; ABC1s nationally tend to be more aware (although are less likely to see TV ads and read local paper). Despite the high awareness, there has been no growth in understanding of what you need to do at switchover in Whitehaven (get digital TV on every set), and no growth in awareness of analogue recorder issue. FIGURE 15: UNDERSTANDING IN WHITEHAVEN, Q4 2006 & Q1 2007 100% 80% 77% 75% 60% 40% 39% 39% 20% 0% What To Do Recorder Awareness Q4'06 Q1'07 Source: Q1 results Whitehaven tracker survey, 214 respondents This observation is supported by qualitative research, which has suggested that whilst almost everyone has heard of switchover, some are not clear what will happen in practice. Moreover, there is some evidence that when they learn about the need to convert second sets and recorders this can surprise and worry. Digital UK has not pro-actively communicated to Whitehaven in the past quarter, and these results show that specific and detailed info is needed (as planned in the two future door-drop leaflets and supplementary press and outdoor advertising). 25

Switchover thought to be happening later this year There is a general sense that switchover is happening at some time later this year : around half of residents (54%) say that switchover is happening at the end of the year a significant increase from Q4 2006 when only one third (32%) cited Q4 2007. Those who cite an incorrect date are likely to think it is happening earlier rather than later. FIGURE 16: UNDERSTANDING OF THE DATE OF SWITCHOVER IN WHITEHAVEN, Q1 2007 Don't Know 12% 2008 10% 2009 1% Already Happened 1% Q1'07 3% Q2'07 7% Q3'07 12% Q4'07 54% Source: Q1 results Whitehaven tracker survey, 214 respondents Following the date announcement on 15th March there are a number of date communications planned, including a countdown billboard at the quayside. From April onwards we will monitor whether residents know the exact month and day switchover is happening. Whitehaven is generally comfortable about switchover Attitudes towards switchover are improving, and 77% now think it is either positive or neutral (up from 69% in Q4 06). There is no difference in the views of analogue (78%) vs. digital households (77%). Attitudes in Whitehaven compare favourably to those in Border (where 74% feel positive or neutral), and Nationwide (where 70% feel positive or neutral). 20% of Whitehaven residents think that switchover is unfair, under the national average of 24%. 26

FIGURE 17: ATTITUDES TOWARDS SWITCHOVER, Q1 2007 Whitehaven: 77% positive/neutral 19% 9% 50% 20% 3% Border: 74% positive/neutral 16% 7% 52% 21% 5% National: 70% positive/neutral 17% 7% 46% 24% 7% Good for the UK Good for me Just one of those things we ll have to get on with it Unfair we shouldn t be forced to convert Other / Don t Know Source: Q1 results Whitehaven tracker survey and Ofcom DUK Switchover tracker national 1954 respondents and Border 325 The area is also generally comfortable with the process they have to go through, with 88% saying they are happy, ok, or not bothered by it (up from 84% in Q4 06). This also compares favourably to 83% for Border and 81% Nationwide. It is encouraging that as switchover nears the population are generally feeling more positive about the process. However we note that 2 in 10 do feel it is unfair, and will continue to closely monitor local public and press sentiment. No growth in conversion leaving 25,000 sets to convert for switchover Primary and secondary set conversion now appears to have stalled, with 70% of first sets and 26% of secondary sets converted and no growth in either figure during Q1 2007. As would be expected the vast majority of existing conversion is via satellite, with a small number able to get digital terrestrial in the north of the switchover area. 27

FIGURE 18: PRIMARY AND SECONDARY SET CONVERSION, Q1 2007 Primary Set: 70% digital Analogue 30% Secondary Sets: 26% digital Sky 25% Freeview 1% Freeview 5% Sky 65% Analogue 74% Source: Q1 results Whitehaven tracker survey, 214 respondents Of the 25,000 homes in the area approximately 7,500 (30%) still have an analogue primary set. Of the 26,000 secondary TVs in the area around 19,000 (74%) remain analogue. No one has said they will not convert for switchover, and so we anticipate that all 7,500 primary TV sets will be converted. Tracker respondents indicated that c.90% of secondary TVs will also be converted, or 17,300 of the 19,000 televisions. This amounts to approximately 25,000 television sets remaining in the area that will be converted for switchover. When asked when they will convert their sets one third (35%) say they will leave it until the point of switchover, and a further 39% don t know when they will convert and could be assumed to also leave conversion until switchover. Digital UK will therefore be planning on the assumption that three-quarters of these TV sets (around 18,500 TVs) will be converted in a relatively short space of time in the few weeks around switchover. FIGURE 19: WHEN PLANNING TO CONVERT, Q1 2007 50% 40% 35% 39% 30% 20% 12% 10% 8% 0% 2% 1% 3% Q1 07 c.9 months before Q2 07 c.6 months before Q3 07 c.3 months before Q4 07 At Switchover Q1 08 c.3 months after When the Government or Council does it for me Don t Know / Other Source: Q1 results Whitehaven tracker survey, 214 respondents 28

When asked which platform they might choose to convert to, the majority (70%) opt for digital terrestrial (Freeview). The proportion naming Freeview as their platform of choice has risen significantly from 47% in Q4 2006. Of those who say they will choose Freeview three-quarters say they will buy a set-top box, and one quarter say they will get an integrated digital television. FIGURE 20: SERVICE MOST LIKELY TO UPDATE PRIMARY SET WITH, Q4 2006 & Q1 2007 100% 80% 70% Q4'06 Q1'07 60% 47% 40% 30% 25% 20% 0% 14% 3% 6% 1% Satellite/Sky Freeview FreeSat Don't Know Source: Q1 results Whitehaven tracker survey, 214 respondents Growing awareness of the Help Scheme There is growing awareness of the Help Scheme in Whitehaven, up from 33% in Q4 2006 to 43%. Of the groups eligible for the Scheme: - Almost two thirds (63%) over the over-75s were aware of the help; and - 43% of those under 75 on Disability Living Allowance or Attendance Allowance (DLA/AA) were aware of the help. FIGURE 21: AWARENESS OF THE DIGITAL SWITCHOVER HELP SCHEME 60% 40% 33% 43% 39% 27% 20% 0% Whitehaven Border National Q4'06 Q1'07 Source: Q1 results Whitehaven tracker survey and Ofcom DUK Switchover tracker national 1954 respondents and Border 325 29

Most expect the help to be financial assistance (38% of respondents), and/or provision of a digital box (26%) few anticipate help with the practicalities of converting (11% thought installation would be provided, only 1% thought that aftercare would be included), which is a core part of the Help Scheme service offer. When asked who will be eligible for help the majority (74%) do expect the elderly to be offered assistance, but few expect the eligible disabled (14%) and visually impaired (6%) groups to also be eligible. More than a third (35%) wrongly believed that low income households would be helped. One third (32%) expected it to be free, over 40% did not know how much it would cost, the remainder generally believed the scheme would cost 30-40. Fewer concerns about switchover but cost remains leading worry Two thirds of residents (66%) have no particular concerns about switchover, and all topics of concern are reduced from Q4 2006. Where concerns do exist cost and cost-related matters (being ripped off by a retailer or aerial installer) remain the key issues for residents. FIGURE 22: SWITCHOVER CONCERNS IN WHITEHAVEN 80% 60% 50% 66% Q4'06 Q1'07 40% 20% 0% 24% 19% Nothing Cost Being ripped off 12% 8% 9% 6% 5% 4% Needing new aerial Source: Q1 results Whitehaven tracker survey, 214 respondents Installing equipment Next Steps Digital UK has two further rounds of direct communications planned for Whitehaven, with a -3 month door-drop leaflet to be delivered in July, and a -1 month reminder leaflet to be delivered in September. In these the focus will be on developing detailed understanding of practicalities of switching over (second sets, recorders, aerials etc.). The continued need to communicate the exact date to the town will be delivered in the direct communications as well as in press and on a countdown billboard in the town centre. 30

Digital UK is working with the supply chain to ensure that local retailers and the platforms are ready for the demand surge likely at the point of switchover. Finally, we will begin to monitor the impact of the analogue service captions which launch on 8 th May warning people that switchover is happening and they will need to prepare for it. 31

Chapter 5 IN FOCUS: Tenants and switchover Results of the tenants survey Different property types and property ownership and management status add complexity to the switchover conversion challenge. Shared or unclear responsibilities between the tenant and the owner of the property, as well as the possible need to convert or upgrade existing communal aerial systems which serve more than one unit in a block of flats, can complicate the switchover process for consumers. Digital UK s Housing and Property workstream liaises nationally and in the lead regions with Housing Associations, Local Authorities and private landlords bodies to raise awareness of these issues, encourage early action and to develop additional information materials providing advice to tenants and landlords. Current activity mainly focuses on the first six switchover regions, Border, Wales, Westcountry, Granada, Scottish and West because housing tenure in flats impacts on the perceived urgency to take early action in preparation for switchover in regions where switchover is not happening until 2012. The switchover tracker survey informs this activity by providing insight into the various housing sectors and Digital UK has monitored progress throughout the last year. Main areas for concern have been the private rental sector and flat dwellers in general, as these groups are consistently showing below average levels of switchover awareness and primary set conversion compared to those parts of the population who own their properties outright and those living in houses. 1 Growth in awareness and understanding of digital switchover Most recent figures for Q1 2007 indicate that digital switchover awareness is currently highest amongst people owning their property outright (87%) and lowest amongst flat dwellers (67%) and the renting sector (73%). Differences in awareness are less pronounced between renters from different landlords, e.g. switchover awareness is at 73% amongst those renting privately and at 72% amongst people renting from a social landlord during this last quarter. 1 The current household weighing profile used for TV set conversion results takes into account household size in the UK, but does not aim to represent all types of property ownership levels (owned outright, rented from social landlord or from a private landlord)or property types (houses vs. flats). DUK are currently exploring to develop separate weighting profiles to represent those proportions in the UK population better. 32

100% FIGURE 23: Q1 2007 SWITCHOVER AWARENESS AMONGST TENANTS AND HOME OWNERS Awareness (%) People living in houses 84% People living in flats 67% People renting privately 73% People renting from the Council or Housing Association 72% People owning their property outright 87% 90% 80% 70% 60% 50% 40% 30% 20% 10% The past year of switchover communication have had a significant impact amongst all of these groups, with an average 15pp increase in switchover awareness FIGURE 24: AWARENESS GROWTH FROM Q2 2006 TO Q1 2007 0% 70% 66% 80% 82% NATIONAL 84% 86% 75% 75% 70% 73% 72% 65% 60% 60% 57% 57% Ow n property outright Rent privately Rent from council 84% 81% 70% 70% 68% 68% 67% Hous e Further improvements have been made in building levels of understanding of what to do for digital switchover. The private rental sector in particular has moved along the same lines as the nation as a whole (64% understanding), showing a 12pp growth of understanding what to do for digital switchover over three quarters (up from 45% in Q3 2006 to 57% in quarter 1 2007). Other groups trailing on the understanding metric are tenants in social housing (46%) and those living in flats (51%). Levels of understanding in those groups have only improved 3 or 4pp over the last year compared to UK wide 12pp growth. Renters and flat dwellers had lower starting points for levels of understanding than the nation as a whole, and as a result of slower growth amongst these groups the gap has been widening over the last year highlighting the need for further targeted communications to these groups. 55% Flat Q2/2006 Q3/2006 Q4/2006 Q1/2007 33

FIGURE 25: UNDERSTANDING CHART GROWTH Q3 2006 TO Q1 2007 80% 70% 60% 50% 40% 30% 64% 61% 52% 70% 66% 56% 57% 49% 45% 52% 46% 43% 65% 63% 53% 51% 47% 45% Q2/2006 Q3/2006 Q4/2006 Q1/2007 20% 10% 0% NATIONAL Ow n property outright Re nt privately Rent from council House Flat Although attitude levels remained stable for all groups relevant to the Housing and Property workstream throughout last year, the groups consistently least positive towards digital switchover and least comfortable with the process as a whole are the same groups which also show lower levels of understanding. The Q1 switchover tracker results suggest that 59% of those renting from a social landlord and 63% of those living in flats feel positive or neutral about digital switchover. This compares to 70% of the UK population. People renting from the council are also showing lower levels of personal comfort with the switchover process with just above 70% of that group giving positive or neutral feedback about the change (73%) compared to UK wide with more than 80%. Primary set conversion and conversion of subsequent sets has increased considerably amongst all of the groups relevant to the housing and property workstream. Quarter on quarter analysis shows major improvements especially amongst flat dwellers (67% had digital TV on their main set in Q1) and private renters (72% had digital TV on their main set in Q1) with increases between 10 and 17pp within the last year. This brings main set conversion levels of these groups closer to the UK national average for primary set conversion of 78% in Q1. FIGURE 26: PRIMARY SET CONVERSION GROWTH Q2 2006 TO Q1 2007 90% 80% 70% 71% 78% 74% 81% 72% 74% 70% 73% 79% 67% 60% 55% 57% Q2/2006 50% Q1/2007 40% 30% 20% NATIONAL Own property outright Rent private Rent council House Flat 34

The switchover situation of tenants: Results from the Tenants survey In order to gain more insight into some of the barriers tenants encounter when preparing their television equipment for digital switchover and to identify potential barriers for digital TV take up, Digital UK re-contacted a group of 477 tenants who previously completed the Ofcom/Digital UK tracker survey during last year. Respondents of this additional survey were re-contacted by phone for a 15 minute interview between 13th February to 9 th March 2007. The issues covered were (i) digital TV conversion amongst communal aerial users, (ii) tenants experiences with getting their preferred television service, (iii) understanding whether tenants and landlords are discussing, or have ever discussed digital switchover and aerial upgrades. Building on the indication of progress highlighted in the analysis of the tracker results above, the re-contact survey also returned encouraging results. Digital TV take up for main TV sets amongst those re-contacted showed an overall high level of 83% compared to an average of 73% main set conversion amongst renters on the national tracker in Q1 2007. However indicative results suggest that digital TV conversion amongst communal aerial users remains at a lower level (63%), impacting in lower levels of digital television conversion amongst flat dwellers in general which is consistent with the switchover tracker results. FIGURE 27: MAIN SET CONVERSION FROM TENANTS SURVEY 100% 90% 11% 8% 12% 6% 12% 9% 80% 70% 60% 50% 40% 30% 30% 40% 83% mctv 42% 24% 28% 37% 72% mctv 87% mctv 20% 47% 63% mctv 30% 32% 84% mctv 42% 42% 83% mctv 20% 10% 0% 16% Tenants overall 27% 13% 37% Flats Houses Communal aerial users * 16% 16% Rent from council Rent privately Analogue Sky Satellite Freeview Cable Source: Digital UK Tenants survey February 2007 n flats =107; n house = 370; n private landlord = 143; n rent from council =334; n communal aerial system = 51 (indicative results only) The survey also suggests that only half of people living in flats currently depend on communal aerial systems to receive a signal on their main TV sets. This proportion decreases to only 20% of subsequent sets in flats 35

connected to a communal aerial system and could be due to an insufficient number of aerial leads available in the flats to connect additional TV sets. It also seems quite common (for 11% of all flat dwellers) to have a communal aerial system available in the flat but the tenant decides not to use it, because it did not give them access to the TV platform they want to use or they have encountered problems with it in the past. This highlights the reliance of flat dwellers on other aerial systems, especially indoor aerials, of which according to an early Ofcom report 50% may not work at switchover. FIGURE 28: MOST COMMON AERIAL SYSTEMS FROM TENANTS SURVEY SUMMARY 100% 90% 80% 5% 5% 5% 6% 6% 5% 11% 8% 12% 15% 70% 60% 50% 40% 30% 20% 10% 0% 14% 10% 49% Flats Main TV set 35% 41% 7% Houses Main TV sets 13% 21% 43% Flats All TV sets 31% 26% 27% Houses All TV sets Other/DK no aerial attached Cable connection Roof or external aerial Satellite dish Indoor aerial communal aerial system Source: Digital UK Tenants survey February 2007 However, only a minority of tenants (16%) have ever encountered problems receiving their preferred TV service in the past and most of the problems were related to common problems such as coverage or old equipment that needed to be replaced. There was no widespread dissatisfaction or concern amongst tenants about their ability to get digital TV. Only a very small number of respondents (3%) have been contacted by their landlord or contacted their landlord themselves about work that needs to be done to the aerial system. Most of these discussions were initiated through general maintenance work and preparations for digital switchover were not always the main reasons for discussing aerial work with the landlord. Nevertheless, indicative results suggest that conversations about aerial upgrade work were more frequent amongst tenants using communal aerials. This also highlights the need for further active switchover communications to tenants, lettings agents and housing associations as currently planned by Digital UK in the first 6 regions, aimed to 36

encourage landlords and tenants to discuss the possible need to upgrade or convert existing aerial systems to digital. The tenants survey will be conducted on a regular basis every 6 months by Digital UK and the next wave should show increasing levels of contact between landlords and tenants about digital television switchover in the lead regions. FIGURE 29: DIGITAL UK TENANT S LEAFLET 37

Chapter 6 IN FOCUS: Westcountry This section looks specifically at Switchover issues among consumers living in the Westcountry. Introduction to the Westcountry The Westcountry TV region covers Cornwall, Devon, the Isles of Scilly, south-west Somerset and west Dorset. FIGURE 30: WESTCOUNTRY TRANSMITTER MAP The Westcountry will be the second region to convert after Border. The 5 main transmitters in the area and their 105 relays switch during 2009: Q2 2009: - Beacon Hill (23 relays) serving south Devon; including Plymouth - Stockland Hill (21 relays), serving south-west Somerset, parts of west Dorset and south-east Devon, including Exeter 38